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Are you ready to get started on a family budget? Are you overwhelmed? It can seem complicated at first – how do you categorize everything? What about expenses that fluctuate or aren’t monthly? The best thing to do is take a step back and look at some practical steps toward formulating your family budget.
Practical Tips To Get Started On A Family Budget:
Before you get started on a family budget, you need to make sure you have the right tools. Having printables is a great way to start. Having a hard copy to refer to is a great way to hold yourself and your family accountable. My blog friend Candi has more great budgeting tips as well, so be sure to check them out.
And simple things like a calculator, pencils with erasers, and access to your bank accounts and bills. You can’t know where you’re going until you see where you’ve been(no matter how scary it may be).
I admit, the thought of being on a budget makes me cringe. But with my oldest in college, and my youngest heading there in 2 years, it is imperative that our family creates and sticks to a budget.
And lastly, you need to get the entire family on board with the idea, or all the planning in the world isn’t going to do any good!
Estimates and Actuals, not Ideals
Remember that your budget is a tool, not a dream machine. Goals are important, but a family budget should first focus on the numbers you’re dealing with. That’s the basic first step. Once you have a grasp on that, you can begin a bit more idealizing, such as saving for vacations, desired items, etc.
And while vacations and desired items are wonderful, you need to be realistic. It’s not worth borrowing beyond your means just to say you had the most wonderful vacation ever(if you can pay for your vacation with cash or ahead of time, then feel free to splurge). Staycations can be just as wonderful, as are local daytrips.
Start with Your Net Income
First, figure out your net income for each month. This means your income minus taxes, insurance, 401K deductions, and so forth. If you are self-employed, subtract estimated taxes, insurance costs, retirement account savings, etc. At this point, you just need numbers.
A lot of times, your income is less that what you think. Be mindful of that. Keeping track of it will prevent any unwanted surprises.
Expenses – Keep Categories General
Next, figure out your monthly expenses. If they vary, figure out an average by looking at the last three to six months’ worth of expenses. For instance, if your electric bill was $150 last month, $140 the month before, and $175 the month before that, then you can estimate a monthly expense of around $155 for electricity. Alternatively, you could take the highest amount, $175, and go with that.
It’s a good idea to keep your categories as general as possible while still preserving clarity. Otherwise, you might get confused or overwhelmed by all the “hair splitting.” For example, instead of having “food, paper products, drug items, etc.” as categories, you can lump all those expenses under “groceries.” Items like “pet supplies” can be their own category, but you might want to include vet bills in that category. Here are some suggestions for categories:
* Charitable giving
* Payment off debt
* Home (mortgage, rent, property tax, insurance, repairs, etc.)
* Vehicle
* Utilities
* Health Care
* Birthday and Christmas gifts
* Cushion (this is money set aside to offset surprises, mistakes, or unexpected expenditures)
* Personal (coffee, eating out, hair appointments, etc.)
One last thing you may want to consider is starting an emergency fund. A small amount budgeted now could save you tons of money in the future!
Stop and Look
At this point, stop and take a look at what you’ve got so far. Are your expenses greater than your income? It’s time to cut back significantly, or find another source of income (or both). If both adults work, maybe it’s time to look to see if it is worth it. The amount you are spending on gas, clothes, lunches, car wear & tear, etc., might be greater than the amount of money you are bringing in.
Not to mention that the emotional stress from your job might lead you to making unfit choices when it comes to family spending.
Actual Expenses
So far, you have two columns – income and estimated expenses. Now you need to add another column: actual expenses. Keep track of the real numbers each week over the next month and see how much/if they differ.
Once you have all these numbers, take time to see what is working, and what isn’t. Make adjustments until you have a healthy income to expenses ratio. Now you’re well on your way to a workable budget! It may be a little difficult at first, but being diligent about it can make for a healthier bank account.
What practical tips do you have to get started on a family budget?
Tags : create a family budget, making sound financial decisions, working parent
Budgeting is so important. I am so glad I still have my budget layouts from years ago because it’s crazy to see how much we’ve improved over the years. Great tips, once you start budgeting it’s hard to go back.
This post is so helpful and informational. I’m a college student, but I can always use these tips to help me, thanks for sharing!
It’s really important to make sure that you stick to a budget especially when you have kids in college. It will help a lot. I think these are great tips for people who would like to save more or start budgeting.
I grew up with a father who obsessed over being frugal. So I learned how to budget in elementary school. I n a way, I’d like to unlearn a little of what he taught me because he was 100% about living for your bank account. But this is really great advice. So many people are never taught how to create a budget which can become disastrous when you try to reach financial goals.
The thing about a budget is that you always need one. No matter how old or young, if you have an income, you need a budget. Good post.
These are all things that I do when we are budgeting. I’m not sure what’s gonna happen with our budget. I’ve got to rework it. My husband lost his job this week due to company cut backs, and everything is just a blur with the budget right now.
I got on a serious budget and savings plan when my husband passed away. I don’t ever want to feel unprepared or scared like that again.
Oh no! Not the word ‘budget’. I am so bad at creating and sticking to a budget. My Mom is really good at calculating different scenarios and making it all look so easy. I need to work on developing an emergency fund.
Having a budget is so important. We always go with the highest number for out budget. Like you mentioned the electric bill, we always put the highest, that way it is nice it it is lower but we are prepared it it is high.
Great tips! The new year is coming up so I am planning to start budgeting real soon! It’s so important to keep budget in balance
Lots of great information Jen, thanks for including my budgeting printables.
Love this. We’ve got a loose budget, but I’m looking for ideas to start a better budget next year. Thanks for the printables.
I think it is so important to be mindful of staying on budget when it comes to family expenses. One important piece of advice I could provide is to live within your means.
This is such a helpful post. We *sort of* have a budget but it’s not really where I want it to be. I get overwhelmed thinking about it so this might be the push and help I need!
Honestly, I can’t think of anything to add – you’ve covered it all so well! OK, except maybe make sure your college student and student-to-be also make their own budgets for themselves – I had to learn to budget when I went off to college, and have been grateful ever since to my parents for making me do this!
I actually have a great post here about college students and budgeting.
https://makingourlifematter.com/budgeting-for-the-college-student/
I love that you created this post about managing finances and expenses because it is so important. With the fluctuation of things and money often being so uncertain I think you’ve outlined some essential tips. Great job!!
Budget is an uncomfortable topic for me and really there’s no reason for that. My husband and I both have our own bills we’re responsible for out of our household but it makes so much more sense if we were open about everything we pay together.
Budgeting is not something I’ve done much of to be honest, even though I know it is helpful. I think the best place to start is with your actual expenses, the things you know you have to pay every month. Then, move on to what you want to save every month, or how much you need as flexible spending. Starting simple is best.
I find having a budget is so helpful, both for my home expenses and for my blog. It helps me see where my bills might be too high or where I’m overspending. It also allows me to see where I can invest more or save more.
This is a wonderful and ON POINT post! Some great information in here that EVERYONE including myself should be devouring. Thanks for sharing.
Thrifting Diva
http://www.thriftingdiva.com
I have started sooo many budgets over the years only to give up and sink deeper in debt. It drives me crazy. I have what I call a wish payment plan for paying off my debt. People have set budgets up for me I have set them up myself. I don’t get why its so hard for me. I mean I am a smart person but when it comes to a budget I am sooo stupid.